The last few years have been incredibly stressful for any of us trying to get a home loan and the perils of the housing markets have dampened consumer confidence and put off many people from buying property. For many of us it has been difficult to secure a home loan and the overall state of the property market has been incredibly poor. Since the recession property prices have fallen year on year. At the same time the pressure that has been put on credit for lenders has meant that it has been harder for many of us to receive a mortgage; or at very least a favourable mortgage.

The problem is multi-faceted and somewhat circular – house prices have been falling so people are reluctant to invest in property or to sell property they already have in order to buy a second home or to upgrade their existing home. At the same time it has been harder for people to secure home loans as credit has been more expensive and lenders more reluctant to take even marginal lending risks. When we combine these factors the housing market continues to be in a problematic state as these factors combine to make the housing market unable to recover. However, recently steps have been taken to improve home loan approvals and to make it easier for the housing market to recover. Also the Bankwest Housing Density report for 2011 shows more Australian’s downsizing their homes, so pricing pressures could ease.

Recently the Reserve Bank of Australia cut the cash rate by 50 basis points and in March the home loan approval rate rose by 0.3 per cent; as was reported in a recent article in the Sydney Morning Herald. When we combine these promising factors we can tentatively see that the housing market may be improving. This is making more of us look into securing a home loan or to begin planning for our mortgage. With that in mind we thought we’d look at improving our chances of securing a mortgage.

While credit is slowly improving our credit rating is still one of the most important factors that will determine how easily we can attain a desirable mortgage. The approval rate may have risen by 0.3 per cent but credit is still problematic so you should take steps to improve and secure your credit rating. Firstly you should check your credit rating to check that you don’t have black marks against your name and the general state of your credit. If you have black marks against your name then you should take steps to improve it by contacting previous and/or existing creditors to see if there are any actions you can take to improve it. If your credit rating is less than ideal then you can take out new lines of credit such as credit cards and use them to improve your credit rating. Just ensure payments are set to pay directly from your main account and that you don’t spend on anything you don’t need.

The second most important factor to consider is capital. The more capital you have to put towards a house then the better chance you have of securing a better mortgage deal. If you can raise and save the capital yourself then that is ideal but you may want to consider family help or selling investments and other items to raise more capital and secure a better mortgage deal. Generally speaking the more capital you have the better your chances are of securing a good mortgage.

Author Bio

This is a guest post by Laura Thomas a personal finance writer for http://www.freehomeloancalculators.com.au, who offers free home loan and mortgage information and calculators.